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Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum -- Ignore unavailable to you. Want to Upgrade?

To: 2MAR$ who wrote (84036)	12/2/2011 11:27:26 PM
From: Cogito Ergo Sum	Read Replies (1) \| Respond to of 218633

Has been a funny week.. good news and crisis.. All my boring mostly yield accounts are up very nicely.. wild ride on NPK.V and ORT.TO... out of ORT but quite long NPK (fert play in Brazil)...

To: 2MAR$ who wrote (84036)	12/2/2011 11:51:57 PM
From: TobagoJack	Read Replies (2) \| Respond to of 218633

unsure of what exploded on this thread - something about god and such, a big topic, but looks like already cut short am still in jakarta, heading to hk soon enough hkg property seems oblivious per below, and gold trading (rather 'not trading') at all in the mean time, just in in-tray, per greed n fear · The most likely end game to the continuing Eurozone crisis has become clearer over the past week given open talk of “treaty change” sponsored by Germany and France. The Merkel-Sarkozy plan’s proposed “fast forward” to fiscal union is the clearest indication yet that the result of the sovereign debt crisis will be to lead to greater integration within the Eurozone, not less. · GREED & fear remains of the view that Germany would only ever sanction overt monetisation by the ECB in a situation where the foundations of fiscal union are much more concrete in terms of the ability of a central fiscal authority to levy taxes. Otherwise, a pseudo fiscal union simply becomes a “transfer union” for Germany to bail out the rest which is not politically acceptable. · The ECB is reportedly looking to extend the maturity of its funding to Eurozone banks to two or even three years. This is clearly designed to address growing concerns about the bond refinancing schedule facing European banks as investors shun bank credit risk. It is this process which is driving banks’ deleveraging. · The latest US dollar swap extension means investors should be alert for any sign of Republican presidential candidates seeking to popularise the issue of the Fed “printing money” to lend dollars to the ECB to prop up liquidity-starved European banks. It would certainly be politically suicidal for Ben Bernanke to start buying Eurozone sovereign debt, as some in the markets have started to hope for. · With talk of fiscal union and treaty change in the air, it is clearly possible for stock markets to continue to push higher in the hope that the Europeans will finally deliver. Still GREED & fear would not want to bet on it. It is more likely that a more rapid move to fiscal union will be forced by sheer market pressure, or a “euroquake”, which means the latest rally should be sold if and when it breaks above the 200-day moving average on the S&P500. · The path to fiscal union is likely to prove “reflexive” because the Europeans are only going to get to fiscal union if sufficiently beaten up by the markets. The reason GREED & fear continues to believe that fiscal union is the likely end game is because the German political establishment remains solidly in favour of more, not less, European integration. · There are essentially two binary outcomes. Fiscal union could turn out to be a disaster with the periphery violently destabilised by the attempt to impose Teutonic fiscal discipline on very different cultures. The other potentially plausible outcome is that German discipline creates the catalyst for a productivity boom in the periphery. · The projected 4m sqm of additional “premier” business office space in East Kowloon, as a consequence of the proposed redevelopment of the old Kai Tak airport, in theory poses a longer term threat to Central district rent levels in Hong Kong. Still the real threat to Central office rents is the massive overmanning in the Western financial services industry. · Another point about Hong Kong property is the continued extraordinary resilience of the residential property market in terms of capital values even as transaction volumes have collapsed, courtesy of higher Hibor mortgage financing costs and draconian government anti-speculation measures. · The Hong Kong government is in no hurry to relax the property measures; most particularly as it is still for now at least politically correct in mainland China to be seen bashing residential property. Still that political calculation could change, both in Beijing and Hong Kong, given a euroquake; though the leadership in Hong Kong would doubtless need to see the political signal from Beijing first before moving. · Hong Kong physical property is not absurdly overvalued in the fundamental sense that the mass residential market has a gross rental yield of about 4% which is still above the current Hibor mortgage rate. This yield is partly driven by one legacy of mainland purchases of Hong Kong residential property. That is a relatively high vacancy rate. · What needs to happen in future in the West is for bust banks to be put into receivership with bond and equity holders wiped out and only depositors protected. What, unfortunately, is likely to happen is yet more bailouts and yet more consolidations of failing entities into bigger entities; though next time political pressures in Euroland may demand nationalisation. GREED & fear continues to recommend investors in Asian equities hedge the continuing euroquake risk by remaining short European financial stocks. · The investment in Daito Trust Construction in the Japanese long-only portfolio will be increased by 2ppts, with the money being raised by shaving the existing investments in Mitsubishi Corp and Softbank by 1ppt each. CLSA is committed to reducing consumption for a better environment and is ISO14001 certified. The content of this communication is subject to CLSA Legal and Regulatory Notices These can be viewed at clsa.com or sent to you upon request.